Steel industry should be publically owned

More and more, steelworkers and public officials are looking at use of eminent domain to take over the steel mills bankrupted by LTV Corp. as the only way to save jobs and union contracts and protect their communities from major economic disaster.

According to Jack Kleinhenz, chief economist of the Greater Cleveland Growth Association, the loss of 3,500 jobs at the company’s mills here would cause nearly 20,000 others to either lose their jobs or suffer severely reduced wages.

This would mean a loss of about $l billion in purchasing power, $70 million in state and local income taxes and $13 million in property taxes.

According to Cleveland Economic Development Director Chris Warren, these losses would be “catastrophic” for the city, Cuyahoga County and the Cleveland Municipal School District.

Although some private investors have expressed interest in purchasing parts of the steel complex, they would operate at a greatly reduced level and they all want one thing – elimination of the union contract. For these reasons interest has spread in the idea of public takeover and ownership of the mills. There are many successful precedents for this in the United States.

For example, the City of New York took over privately owned subway companies that were failing in the 1930’s and ran them under the city Board of Transportation and later, through merger with the bus lines, as the Metropolitan Transportation Authority, which continues as a fully unionized operation to the present day.

More recently, in the 1990’s community and union groups succeeded in reopening the closed Nabisco Bakery in Pittsburgh, which had employed 400 workers.

The facility was taken, using eminent domain, by the Steel Valley Authority, and continues to operate successfully with an even larger and fully unionized work force. Public ownership of production facilities is widespread throughout the world.

Cars in France, for example, are produced by the French National Automobile Authority – La Regie Nationale des Autos, also known as Renault. French auto workers have wages and benefits considerably better than in the United States.

Public ownership of steel making facilities abroad is, in fact, one of the reasons given by steelworkers for unfair foreign competition in the U.S. market.

Even though wages and benefits are higher in Western Europe and the steel must be shipped, it still can be sold at a competitive price.

The reason for this goes to the heart of matter. LTV is abandoning steel production because they can make higher profits by investing elsewhere. The private owners are in search of maximum profits and can invest anywhere in the world.

Publicly owned facilities only need to cover costs. They are not burdened with the need to pay huge salaries, expense accounts and golden parachutes to top executives and make maximum profits for private investors.

If the Cleveland mills were taken through eminent domain by the City, County or Port Authority they would also not be burdened with the debts LTV incurred as it used the steel making facilities for speculative investments elsewhere.

These debts would be a matter between LTV and its banks and creditors to be resolved through the bankruptcy court. Who would manage the mills if they were publicly owned?

In terms of the actual production process, no one knows how to manage that better than the steelworkers themselves. You would have an incredibly capable management of production committed to steel making rather than private enrichment.

In terms of sales and financing, there are plenty of unemployed managers who can be hired. As city employees, they would have decent wages and benefits.

The fight for federal loan guarantees and fair trade policies would continue under public ownership, but the situation would, at least for the time being, be stabilized and it would be possible to build a campaign to greatly expand the market for steel by addressing the huge infrastructure deficit in our country.

According to the American Society of Civil Engineers this deficit amounts to $1.3 trillion over the next five years, more than enough to keep the steel industry operating at full blast providing materials to repair bridges, water and rail lines, to rebuild schools, hospitals highways and housing.

Addressing these needs would also provide jobs for tens of thousands of unemployed. Ordinary people would have money in their pockets to purchase goods and revive the failing economy.

An important step in this direction is the Rebuilding America’s Infrastructure Act (HR-1564) introduced by Republican Steve LaTourette and Democrat Dennis Kucinich. This bill would give local government authorities no interest loans for infrastructure projects using steel produced in the United States. Similar bills are needed at the state level.

In Ohio 26 percent of the bridges, 46 percent of the roads and 76 percent of the schools need rebuilding or major renovation.

In the face of such needs, it would be a crime to submit to the whims of the private investors and shut down steel production. Public ownership is the only way to preserve jobs and union contracts, rebuild our cities and stop the slide to economic ruin.

Rick Nagin is administrative assistant to Cleveland City Councilman Nelson Cintron, Jr.